Teaching Resources

Your Pay

So you still think registering with an outsourced umbrella company is a good idea?

It has nearly been 6 months since legislation passed regarding umbrella companies which limited the deductions a teacher could claim. Previously to April 2016 a teacher could claim travel to & from school as well as 3 meals a day in addition to other ‘relocation expenses’ such as flights, rent and the cost of a visa. Even with 6 months having passed, teachers are still being told they registering with an umbrella company is the best way to be paid.

Maybe it’s the best way for a small teaching agency, but not for you as a teacher. It is costing you money.

Since April 2016 a teacher is limited to claiming relocation expenses as a tax deduction. Some agencies may tell you that “you can claim the cost of your flight back”; this is untrue. You can only claim it as a tax deduction, of which you will only see a fraction of the actual cost back.

Since April 2016 you still have to pay two lots of fees with an umbrella company (which you do not have to pay when you choose to work with Protocol Education and be paid PAYE):

Admin fee (anywhere from £15-£30 every week)

Employer National Insurance Contribution (ENIC)

Approx £60 per week when working 5 days

Your agency pays this fee, not you, when you are on PAYE

If you choose PAYE (where your agency pays you directly) you DO NOT have to pay these fees. If you are recommended by your agency to register with an umbrella company, YOU DO have to pay these extra costs. These can total up to £90 per week of extra fees that you have to pay through an umbrella company.

The unfortunate part is that you will always be financially worse off being paid through an umbrella company if you’re on the same rate of pay. Agencies won’t tell you this, but having you on an umbrella company saves them paying the ENIC. This is often to the tune of £60 per week, so they can pocket this difference. As the UK’s largest education agency we can absorb this cost which is why we do not advocate the use of umbrella companies as a means to be paid. Smaller agencies cannot absorb this cost, therefore they attempt to pass it on to you through an umbrella company.

Here is a comparison; if you’re on PAYE with Protocol Education and are being paid £130 per day, you will take home just over £500 per week (when working 5 days per week.) To achieve the same after tax pay with other agencies on umbrella companies, you need to be earning nearly £160 per day. The difference is that significant.

Even if your agency offers to pay you £140 per day through an umbrella company, you’re still on average £50 per week (PER WEEK!) worse off.

Don’t listen to the spin that agencies tell you about umbrella companies; they are there to save the agency money, not you. You will always be at a significant financial disadvantage when being paid through an umbrella company over a PAYE system.

At Protocol Education we do not make it a requirement that teachers register with an umbrella company, nor do we financially penalise those who choose to be paid directly through our PAYE payroll team. We have our own payroll department and pay you directly - not through an outsourced umbrella company - so your take home pay is maximised when you work with Protocol Education.